Like Twitter itself, there is no right or wrong way to use Twitter Lists. But there are some basic rules of etiquette along with some strategies that I've observed in the week I've been playing around with them.
Parameters of Lists:
Etiquette: Currently, Twitter is allotting users 20 lists with a maximum of 500 persons per LIst. This initially seems like ample space but once you get into the process of creating Lists, you might find yourself hitting the limits. It's unknown whether Twitter will eventually offer users the ability to create more or larger Lists.
Strategy: Play around with Lists. Create some and delete the ones that you find aren't useful. For example, I was initially creating geographic Lists but I found that some Lists only had a dozen or fewer names on them and I wasn't going to be looking at them very often. So, I deleted them and created a few topical lists that would provide more value to me.
Public & Private
Etiquette: You have the option to make your Lists public or private. If you create a Private List, the people who are on it will not be informed or aware of their presence on it. You may want to keep Lists of family, closest friends, or people you despise private if you are concerned with revealing too much about your personal life or offending or embarrassing others.
Strategy: I've started to keep Lists I'm still in the process of building private and when I think they are finished, I've changed their status to public. Remember, through the Edit feature, you can always make a public List, private and vice versa.
Following vs. Lists:
Etiquette: Unlike Following, Twitterers don't assume Lists are reciprocal. Because each user has their own rationale for creating lists (friends, colleagues, news feeds, celebrities, etc.), it's not expected that you will put everyone you follow on a List or that people you put on to a List will somehow have a List that you will be appropriate for.
Strategy: There are always some people who you follow who will never follow you back. They could be celebrities, high profile Twitterers or just be highly selective about who they follow. So, it's impossible to create the kind of reciprocal friendship that many people seek in social networking. I've found one strategy is to stop following those users and put them on a List instead. This lightens the load on my Tweetstream but means I can still click on the List and see what they are up to.
What's in a Name?
Etiquette: You're not allowed many characters when you name a List so you should give your Lists names that concisely sum up the rationale for including people on them. Examples might be Journalists, Friends, Web Designers, Music, Chicago, People I've Met or Conference Presenters. However, putting together a List of celebrities or high profile Twitterers and naming it My Friends will make you look delusional! You can use Lists titled Most Influential or Thought Leaders to flatter popular people but considering the hundreds of Lists some of them are on, your effort is likely to go unnoticed.
Strategy: One way you can make your List memorable is to give it a descriptive but interesting name. List names like Argumentative, People Who Owe Me Money, All the Geeky Ladies, and The South: Tech Scene give you an idea of why individuals are on a List but distinguish your List from the generic titles most Lists are given. Names that are too obscure (People From That Dinner) mean that the List will only be of use to you. Through the Edit option, you can rename your List whenever you choose.
Good Lists & Bad Lists
Etiquette: So far, most Lists I've seen have been complimentary and are composed of people the Twitterer admires or considers friends. But Lists are neutral tools and can be used to highlight enemies as well as friends.
Strategy: If you find yourself on a List with an uncomplimentary name (Douchebags) you can block the List creator and you will find yourself removed from the List. Of course, this only works for Lists that are public as you are not informed of your presence on an individual's private List.
Personal or Shared?
Etiquette: I've seen some speculation that how many Lists an individual is on will be the new sign of popularity rather than how many Followers a user has. However, considering how easily this feature can be manipulated--an Twitterer creating dozens of bogus accounts & Lists that include them--, having a high List count is not necessarily a sign of quality.
Strategy: A better strategy than trying to be placed on a lot of Lists is to create truly memorable Lists and have people follow them. Instead of considering your Lists to be an address book of your friends, create one or two Lists that reveal your deep knowledge of a field. For example, I saw an awesome Music List of 500 Indie musical artists & labels that I could never reproduce myself. Following other people's well-crafted Lists not only exposes you to users you'd never otherwise have heard of but is a compliment to the Twitterer who spend the time & effort putting a dynamic List together.
What amazing Lists have you come across that you'd like to recommend?